Exploring the Impact of Weather, Housing Types, and Income on Electricity Consumption Disparities in Saudi Arabia: A Cross-Sectional Analysis Using OLS and Fixed Effects Models

Abstract

Understanding the drivers behind residential electricity demand is crucial for policymakers, utility companies, and households alike. This study investigates the influence of weather conditions, housing types, and income on residential electricity demand in Saudi Arabia. By analysing variations in heating degree days (HDD) and cooling degree days (CDD) as indicators of weather conditions, alongside different housing configurations including apartments, villas, and traditional houses, we examine how these factors shape household electricity consumption patterns. Housing types also impact electricity consumption, emphasizing the need to consider various configurations in energy planning. The findings reveal significant associations between CDD, income, and residential electricity consumption, underscoring their roles in shaping demand. Notably, in the preferred Ordinary Least Squares (OLS) model, the income elasticity of demand is estimated at -0.2142, while the CDD estimate in the same model stands at 1.0049. The Fixed Effect (FE) model reveals an income elasticity of demand of -0.2632, a CDD estimate of 1.2494, and an estimate of 0.2076 for traditional houses. This study extends the existing literature on residential electricity demand in Saudi Arabia by comprehensively analysing the roles of weather, income, and housing configurations in shaping energy consumption. These findings hold implications for energy-efficient urban planning and policy development, offering insights into promoting sustainable energy use based on climatic variations, housing preferences, and income levels. The study provides a nuanced understanding of the intricate interplay between climate, housing types, income, and electricity demand.